MOL has agreed with its Russian partners on compensation for damages by contaminated crude oil

Budapest, 30 October - Zsolt Hernádi, President and CEO of MOL, Vagit Alexperov, CEO of Lukoil and Nikolay Tokarev, CEO of Transneft have signed an agreement on 30 October in Budapest in which the Russian parties guarantee compensation to the MOL Group for damages by the spring contamination of the Druzhba Pipeline. At the same time, the parties signed a letter of intent to extend the supply contract between MOL and Lukoil until 2025. 

The MOL Group has agreed with Russian companies Lukoil and Transneft (a partner operating the Druzhba Pipeline) to compensate for damages by contaminated crude oil delivered in the spring through the fault and as a result of wrongful acts of third parties. Pursuant to the agreement, the Russian partners will compensate for MOL Group’s financial damages caused by the incident, including the costs of purification of the crude oil received. Thanks to cooperation of the companies involved, this contamination has not caused any interruption anywhere in fuel production. 

 At the same time, the MOL Group and Lukoil signed a letter of intent to extend the supply contract between them until 2025. 
“There is a decade-long good relationship between the MOL Group and these Russian companies. Since 2005, Lukoil has been delivering crude oil to Hungary and Slovakia steadily and reliably. Today, we have reinforced this good relationship with our letter of intent for crude oil supply. At the same time, Hungary managed to be the first country to close this case of crude oil contamination. Our Hungarian supply security system and our good partnership with Russian company have both stood the test excellently. Our Russian partners have assured us that they will reimburse our costs incurred in managing the situation. We have a good relationship with our Russian partner companies and are interested in preserving it,” said Zsolt Hernádi, President and CEO of MOL Group. 

Background:
In the spring of 2019, a significant amount of contaminated crude oil was released into the Druzhba Pipeline through the fault and as a result of wrongful acts of third parties. On 26 April, MOL decided to temporarily suspend the receipt of crude oil via the Pipeline, thus preventing the entry of contaminated oil into our country. MOL made this decision to ensure complete safety, despite the fact that until then, only the crude oil having entered MOL’s pipelines was compliant with relevant standards (with a contamination level below 10 mm). MOL and its Russian partners immediately started to work out a safe solution which could be achieved as soon as possible.
To resolve this situation, MOL undertook in early May to remove some of the contaminated oil from the pipeline, which would be stored and rendered reusable after mixing with clean crude oil, in cooperation with its Russian partners. MOL would handle this oil according to stringent safety requirements, in a securely locked place. MOL would dissolve contaminated crude oil by mixing with pure crude oil and neutralize the chlorine-containing compound in the contaminated part.